How to Determine If a Fort Worth Rental Property Is a Good Investment

Fort Worth is a rapidly growing market in Texas, and if you’re hoping to purchase an investment property here, you’re making a good decision. There’s a lot of diversity in the market, and much potential for growth. The population has been growing and the local economy is strong. We’re seeing a lot of interest from investors across the world.

A good investment depends on your investment goals. If you’re thinking about short term furnished rentals, you’ll be looking for a different sort of property than an investor who wants to focus on long term leases. 

So when you’re determining whether a Fort Worth rental property is a good investment, start with your unique goals. Let those drive your decisions as you look for potential acquisitions. 

There are a few things that need to be checked off for any investment property to be worth your resources. We’re highlighting those in today’s blog.

Consider Age and Condition With Fort Worth Rental Homes

Before you buy an investment property, take a close look at its condition and its age. The amount you spend on maintenance will cut into your cash flow and your long-term ROI. 

All properties will inevitably need some work and routine repairs. However, older homes will often be more expensive to fix and repairs may be more frequent. 

Buying a property that needs a lot of work can be tempting; you can usually get a much lower price and it might seem like an attractive project, to fix up the property in a way that reflects your tastes and preferences. 

But, you need to remember that you won’t be living in the investment home. You’re planning to rent it out, and it makes more sense to buy a property that’s already in good condition and won’t require a lot of work in order to be placed on the rental market. The longer you spend renovating your investment, the longer you’re delaying the collection of consistent rental income.

Do The Math: Are You Comfortable With the Cash on Return?

Smart investors will run the numbers and analyze the financials before purchasing a rental property. A good investment will provide positive cash on cash return. 

If you’re not sure how to calculate this, it can be done in this simple way: compare the amount of cash you need to invest with the annual cash flow you anticipate earning from the property. This rate of return will help you identify which properties will enable you to earn more in the short and long term. 

The amount of your cash on return will vary. Most investors are comfortable buying property that will earn them at least eight percent cash on return. Perhaps your requirements are a little higher and you won’t buy without a 10 or 12 percent cash on return rate. It really depends on your current financial situation and your investment goals. 

There are other financial metrics to use when you’re determining whether an investment is a good idea, and those benchmarks might work better for your financial goals. The cash on return system is just one option.

Good Investments Attract Good Tenants

A good investment property will also provide you with a reliable pool of tenants and other factors like low vacancy rates and high occupancy numbers. It doesn’t make sense to buy a remote property that will take months to fill. Choose something that will attract good tenants quickly. 

Location is obviously important; people will want to be close to work and school and shopping. A good investment home is a home that people will imagine living in for several years. Before you buy, talk to a Fort Worth property manager about whether it meets the requirements of high quality tenants. 

We enjoy working with investors at every level. If you’d like some help identifying investment opportunities or choosing the right property to rent out, please contact us at Trend Property & Management. We lease, manage, and maintain long term residential homes and short term vacation properties in Fort Worth, Keller, Saginaw, Hurst, Weatherford, and surrounding areas.